Better paid, better utilized physicians can transform the VA

The U.S. Department of Veterans Affairs, Veterans Health Administration (VA) is a mission-driven health organization, serving our nation’s veterans. A patient population of 8.9 million, led by David Shulkin, MD. An early leader in health technology adoption. The VA has faced serious issues; however: long patient wait times (deadly long in some cases) and high physician turnover rates.

Kaiser Permanente looks fairly similar at the start. A nonprofit health system supporting 11.8 members under the inspirational “Thrive” banner, led by Bernard Tyson. An early leader in health technology adoption, Kaiser also faced criticism about access to care and their treatment of physician staff — but most of that changed a decade ago for Kaiser. Today, Kaiser earns high marks for patient care and has 4x better physician retention than the VA.

There are two key points where the two organizations are starkly different: how they pay and how they utilize their physicians:

Kaiser pays the average primary care physician 21 percent more than the VA ($35,262/year more) and the average surgeon 55 percent more than the VA ($116,291/year more).

The VA has a patient-to-physician ratio of 356 to 1 — meaning that there is one physician for every 356 veteran patients. This is 55 percent difference compared to the Kaiser ratio of 554 to 1.

This math starts to paint a clear picture of how Kaiser is carving out better margins and patient care success. Kaiser is using fewer doctors — more smartly matched to patients, practicing at the top of their license — and is thus able to pay their doctors significantly more, resulting in significantly higher retention, which also saves recruiting costs and allows them to pay physicians more.

We worked with a graduate student researcher at UC Berkeley on this research, and she found that if the VA could match Kaiser’s physician-to-patient ratio, they would save $1.6 billion a year. And if the VA used those savings to increase all their physician salaries to Kaiser levels, they would still save $427 million a year. The full VA report is available to download here if you want a closer look.

Across the health care landscape, support for physician staff is an area of hospital operations that is overdue for innovation. There are very few health technologies on the market focused on helping improve physicians satisfaction; most of the big technology categories like EHR and telemedicine are contraindicated for physician well-being.

The lesson from comparing Kaiser and the VA is clear: Investing in physicians pays. Helping physicians practice at the top of their license through smart patient access initiatives is a start. Paying physicians fairly is another key step. Better paid, better-utilized physicians enable health care organizations to operate more efficiently, reducing turnover, bringing down costs and improving patient care. Health care leaders, ask yourselves: In a decade, do you want to be a VA or a Kaiser?